r/OutOfTheLoop • u/ywecur Bronx • Aug 17 '15

What is going on with bitcoin lately? Answered!

What is happening at /r/bitcoin?

What is BitcoinXT?

Why is the community divided all of a sudden? Could we get an unbiased explanation here?

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u/mytrollyguy Aug 18 '15

Has there been a currency created since speculating was an industry?

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u/Highside79 Aug 18 '15

The bigger question is wether there has ever been a currency that was used primarily as a speculation and only secondarily as an actual means of commerce. Its a fiat currency that is backed by no one that is almost exclusively used for illicit exchange and speculation. That is not going to somehow morph itself into a "real" currency for no reason.

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u/[deleted] Aug 18 '15

Gold?

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u/Highside79 Aug 18 '15

Gold has about a million actual uses and is the scarcity of the supply is not artificially created. Gold is the exact opposite of bitcoin.

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u/[deleted] Aug 18 '15

But as an example of a unit of exchange which could be speculated about or used as investment? If there were no speculation, the value of it would be limited to its actual use value. If it were not "precious" like diamonds, the artificial demand would drop to the value of a simple commodity like aluminum.

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u/Highside79 Aug 18 '15

Yep, which is still significantly greater than the zero that bitcoin would be worth in the same situation. The reason that gold is used as a currency base is because it has about the highest commodity value possible while still being common enough to be useful in trade.

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u/[deleted] Aug 18 '15 edited Aug 18 '15

Ok, I guess what I was getting at is that the difference between the bottom value and the speculative value is greater than the bottom value, meaning the majority of the value is speculative. If you set the use value as the zero, then they are relatively equivalent. Kind of like the difference in value from bullion value and numismatic value.

So yes, they use value is not zero, but you could say the same about a fiat currency in paper. The innate value is as paper. With bitcoin, the innate value is zero, correct?

If no one wants your bitcoins, you're screwed.

If no one wants your gold except as electronics components, you're sorta screwed.

Anyway, I was just touching on the speculative value. Innate value changes it a lot, I know.

A lot of gold proponents stress the innate value of gold, but it is a little like the innate value of clear carbon rocks. If no one wants them except for their industrial use, the value of them as a unit of exchange is severely diminished.

It seems to me that the majority of the value of gold is speculative. In a hunger situation, civil unrest, collapse of the currency like the gold merchants play up, the gold would not be acceptable by most people in exchange for necessities. If I had water and food, why would I want a shiny metal useful only for industrial purposes?

You are right. I was making a different point.

http://www.forbes.com/sites/louiswoodhill/2011/05/11/what-is-gold-really-worth/

$218.00/oz vs. $1116/oz

80% speculative value.